The discoloration you see when switching apps is completely normal. That's just the OS trying to find the color for those pixels when you switch..it happens because the vertical lines on the wallpaper are so small (approx 1 pixel wide, so basically 680 lines across the screen going up and down) if it doesn't flicker when you are at the home screen then your screen is perfectly normal

Thanks a lot.
For everyone wondering, mine is a C3 from August, week 34.
Flawless

I have a 32 gb black and a 16 gb white and both start with F2. Got these two on launch day. When I set the OP test image on both phones as the home screen, both appeared as the gradient grey as another poster has mentioned. Both phones didn't exhibit any flickering. Another poster mentioned that we should be getting vertical lines so I just realized that I can get the vertical lines to show by adjusting the test image when I am setting it as the home screen or lock screen (pinching in or out to zoom in or zoom out at the "move and scale" part). With the vertical lines appearing on my home screen for both phones I did not notice any flickering. Not sure if this is the proper way to test as the OP had described.

No, you're just supposed to set the picture as your wallpaper without tweaking it, or else it won't have the same effect. The vertical lines will show for both phones that don't exhibit flickering and those that do. The phone flickers because there's an interlacing issues when you can see tiny vertical lines when looking at colored backgrounds. It only flickers when there's dark area, like near the dock, or when you're setting the picture, where the share, start slideshow, and delete buttons are. It's not about flickering, it's about the lines. Like someone repeated, the flickering is just a byproduct to test if you have interlacing/vertical lines. The picture that someone posted is a perfect example of what we see, and it's hard to reproduce on a video camera.

See how there are vertical lines going through that are more apparent on the left picture? It makes things look pixelated at times.

And to repeat, mine is an F2 week 40 with interlacing. I might replace mine at the end of the week to see if I can get one without interlacing because it's pretty lame that I knew I had interlacing before I figured out that it was interlacing, if that makes any sense. The number one thing that bugs me with phones are display issues (which I tend to notice right away, especially in this case), next to cosmetic issues. I'm just crossing my fingers that the replacement doesn't have any hardware or cosmetic issues.

I looked at many iphone 5's at the apple store and some that my friends own and noticed an interesting correlation between the serial number and the screen quality.

Another post is talking about the same issue, and these screens have apparent vertical lines which makes the screen look grainy and chunky. For me, it made my eyes sore when I roll my eyes over the screen or when the screen moves when I type.

One thing people have seen on these screens is continuous flickers when the attached image is set as the home screen. I took it from the post above and bigcstyle4 posted it on the 53rd reply.

I just got curious if this is really a correlation between the serial number and the screen quality.

Please post the first 2 letters of your serial number(F1 / F2 / DN / C3) and what you see when you set the image as your home screen.

"Apparently"

The screen door effect is a Moiré interference pattern. It will affect any display, not just the iphone.

The image will display fine when it's static, but the patterns appear if it's resized, rotated or animated. With the coloured subpixels, you get those funky purple and greens too. It happens when you try to display one grid pattern over another. One grid being the image, the other the pixel grid. That image is a worst-case scenario for triggering the effect!

The screen door effect is a Moiré interference pattern. It will affect any display, not just the iphone.

The image will display fine when it's static, but the patterns appear if it's resized, rotated or animated. With the coloured subpixels, you get those funky purple and greens too. It happens when you try to display one grid pattern over another. One grid being the image, the other the pixel grid. That image is a worst-case scenario for triggering the effect!

I have an F2 (week 39 black) with fairly bad screen flicker. I thought I was imagining it. It appeared as though I could see pixels. I agree with the OP, my (original week 36) launch day iPhone 5 had a flawless screen with no flicker.

I am wondering, does anyone else have a yellowish tint on their screen? My first iPhone had an amazing screen but this current one looks awful. I'm just wondering if there are some sub-par displays being used that contribute to flickering and yellow screens. It also doesn't help having good eyesight...

Side note: To the guy that said that Apple QC is slipping. It may be. But I would argue that Apple has never faced such universal demand. Sure, many bad units will slip out but I think they are in the minority (a vocal minority indeed). Also, I want to point out that it's not Apple that is slipping specifically, it's the production partners e.g. Foxconn. China is possibly facing a revolution in the labor market not making things easy for the workers and for those in charge. Foxconn has already stated that the iPhone 5 is the hardest device to manufacture that they have ever encountered. Apple is always on the cutting edge for production techniques and has billions of dollars at their disposal. If Foxconn can't do it, they will take their business elsewhere. The stakes are very high and this is no easy task. I'm sorry for the rant.
TL;DR: It's not Apple, it's their production techniques and the suppliers are struggling to keep pace.

C3 and it flickers in the part where it says slide to unlock and the image gets darker. And my home screen flickers too. When I launch or exit an app it goes crazy with vertical colorful line. I haven't notice anything before this and I'm not going to return or exchange it.

I've had tons of issues. The first one (screen perfect) the home button stopped working, next dead row of pixels, dead wifi, and now this freaking interlacing. It really is incredibly annoying on my screen. I realize that it is the epitome of a "first world problem." I think I am going to just sell it and be done with iPhone5 for a while. One expects a "premium" product when they spend a "premium" price. Perhaps, I'll try again in a couple of months when they (hopefully) have their QC issues resolved. It is really embarrassing for Apple and not what I have come to expect from Apple.

If they going to "toot" retina displays as this amazing innovation, they better put their product where their mouth is. For them to tell me it is normal and not replace it is absurd. Why should I have to deal with a subpar panel (I assume one of the AU Optronics panels - they've always produced ***** panels), when the display that is getting beat up is more desirable because of its "stunning" display?

Rant over...

Really disappointed...

The problem with the flickering this is: it's real, not imagined, and cheaper phones from lesser quality manufacturers have better screens.
Go look at an HTC One X screen. It is made by Sony. It is the best screen on a phone today, and no one can argue this (although i'm sure people will). No flicker at all on that screen.
Went through 5 iphone 5's and they all have flicker. Sixth one did not. It had a chip in the aluminum instead, but whatever, I'll live with it. By the way 5 out of 6 also had chips/scratches.

Go look at an HTC One X screen. It is made by Sony. It is the best screen on a phone today, and no one can argue this (although i'm sure people will).

Please. It was the best screen, and maybe not even that (the GSIII gets compared far more, although I HATE pentile). The experts are now saying the 5 has the best screen and possibly out of any device consumers own. It's got very accurate color reproduction. Plenty of articles on it.

The problem with the flickering this is: it's real, not imagined, and cheaper phones from lesser quality manufacturers have better screens.
Go look at an HTC One X screen. It is made by Sony. It is the best screen on a phone today, and no one can argue this (although i'm sure people will). No flicker at all on that screen.
Went through 5 iphone 5's and they all have flicker. Sixth one did not. It had a chip in the aluminum instead, but whatever, I'll live with it. By the way 5 out of 6 also had chips/scratches.

Funny you mention the HTC One X because the first time I saw it on display I was disappointed with the screen because it actually had the exact same vertical lines except even worse than my iPhone. I was really confused because all the reviews said it had the best screen. I have since seen other One X screens and now know its not typical.

I really think these things cost a company its reputation especially those who don't understand the manufacturing and follow tech sites. All they see is a supposedly new phone they signed a multiple year contract for and it's dented or has screen defects.

F2 replcaement phone here. I just fell upon this article and mine suffers from this interlacing issue. I have an appointment with the Genius bar to have this replaced. Also, when switching between applications is when its really apparent with mine. I see a bunch of wacky colored lines appear and then go away every time I switch apps. I'll see if I can snag a pic of it.

F2 replcaement phone here. I just fell upon this article and mine suffers from this interlacing issue. I have an appointment with the Genius bar to have this replaced. Also, when switching between applications is when its really apparent with mine. I see a bunch of wacky colored lines appear and then go away every time I switch apps. I'll see if I can snag a pic of it.

Yes, if you can get a picture of it, that would be really helpful so we can see exactly what your interlacing looks like.

This is what it looks like in process of quitting an app except the lines are colored and flicker.

Does it do that only with that "special" grey image as home wallpaper or all the time regardless of the background?

Someone mentioned it was normal to see discoloration when switching and closing apps because the software tries to assign proper pixel color and it confuses the GPU or something (when using the OP's image)

Does it do that only with that "special" grey image as home wallpaper or all the time regardless of the background?

Someone mentioned it was normal to see discoloration when switching and closing apps because the software tries to assign proper pixel color and it confuses the GPU or something (when using the OP's image)

I just saw the post above on this page, my bad. Yes it only does that with that special wallpaper. So I guess mine it normal; although it does flicker on the home screen near the dock where the wallpaper turns a darker shade. I realize now its about that lines. So I guess I'm ok.

I just saw the post above on this page, my bad. Yes it only does that with that special wallpaper. So I guess mine it normal; although it does flicker on the home screen near the dock where the wallpaper turns a darker shade. I realize now its about that lines. So I guess I'm ok.

I would say so. If it is not something you noticed until this thread, I wouldn't worry about it especially if you don't see any symptoms during day to day operation, gaming, etc. You might really regret getting it swapped out and entering the iPhone 5 lottery...

Ugh this is frustrating. This is my 3rd iPhone 5. First, had headphone issues and the 2nd the screen was coming apart/clicking in the upper left hand corner. With the replacement I got last night, I noticed when I got home, the latest replacement screen looked weird. Kind of pinstriped but only certain times. It's really noticeable when I'm in the email or settings app and the blue status bar looks kind of pinstriped. It's annoying which I was willing to live with until I noticed what looks like dust or a dead pixel. Have an appointment with a genius today so hopefully they will swap it out, but I think it will be more for the dust under the screen rather than the interlacing. Just frustrated that all this is starting to happen after the 30day return period. So I guess maybe 4th time is the charm??